Transition Path Of China's Supply Of Public Goods

Public goods are the products of public demand and public interest in human society, which are the important channel to meet public demand and public interest. The fully and efficiently supply of public goods can promote the development of social welfare, which can also provide a basic platform for the supply of private goods.With the intensification of the reform of socialist market economy, the government is evolving its function from providing private goods to producing market-based public goods. However, during the process of structural transition and social transformation, a dynamic equilibrium among three parties - government, business, and non-profit organizations has not reached yet. There still exists a defect in the mechanism of public goods supply: the government monopolies the supply of public goods but does not shoulder the corresponding responsibility; while the market guides investment to the supply of public goods blindly without adequate motives; and the participation of NPO is limited. NPO should be a primary supplier of public goods. The volunteering mechanism of NPO can supplement the failure of market and government. Hence appropriate government mechanism support is needed for improving NPO.The object of reforming the public goods supply system is to establish and further improve the economic pluralism supply model with the participation of government, market and NPO. The transition of the public goods supplement system is actually a shift from a system in which the government is a sole provider, to a system of multiple providers including government, market, and nonprofit organizations. These transformation changes the public goods supply system from suboptimum to optimal, making the Pareto optimality a reality. Besides the increasing returns and imperfect market, the path of changing the public goods supply system is also restricted by the natural mode of institutional change, state system, political factors, traditional culture, and the inherent laws of public goods supply system. The interplay of these elements determines the direction and process of institutional change.Further analysis reveals that the government of developed countries, such as the UK, USA and Germany, always adopted similar principle and strategy to adjust their public goods systems along with the social development in a bid to achieve the target of both optimal resource allocation and optimal productivity with government as the dominant leader in the reform by adjusting the dynamic balance between three parties to meet the specific demands in different stages of societal and economic development.China's evolution of public goods supply system is different from that of the Western developed countries. Despite of the particularity of the system in China, the objective selection and rules of market economy reform should still be followed. The supply system of dynamic equilibrium, which includes government, nonprofit organization and market, is taking shape. On this basis, the urgent aim in system design is to promote the development of nonprofit organization, to ensure the health operation of volunteer mechanism and agencies, and to perfect the multivariate supply system of public goods.